Towers Watson is sticking with IBM Superlife as the administrator for the 41 corporate super funds it advises, even though the scaleability of the IBM Australia division is about to be decimated by the loss of its major foundation client.
The managing director of Towers Watson, Andrew Boal (pictured), acknowledged that the scaleability of some aspects of IBM Superlife’s operations would be reduced, once Russell takes back administration of 220,000 member accounts by the end of this year. Russell’s about-face on outsourcing administration, following the expiry of a five-year agreement with IBM Superlife, leaves Towers Watson’s 66,000 accounts as by far the largest client of the computing giant’s Australia-only super admin business.
However, Boal said that “more than 90 per cent” of Towers Watson’s corporate fund clients were entirely or partially defined benefit, and therefore scaleability mattered less than specialist expertise in dealing with these “complex” benefit structures.
Boal was not alarmed at Russell’s announcement that it would re-employ 70 of the 199 positions it had outsourced to IBM, shortly after purchasing Towers Perrin’s asset consulting and administration businesses in Australia in 2004. Towers Watson’s major administration clients are each supplied a dedicated team by IBM SuperLife, and Boal said he’d received assurances that these teams would not change.
Michelle Griffiths, the chief executive of major Towers Watson admin client, AvSuper, said she felt positive about IBM SuperLife’s commitment to the member admin business, given the number of administration tenders in which it had recently participated.
She said that quality of administration mattered more to AvSuper than scaleability, because the hybrid fund’s 5400 members had higher-than-average account balances, meaning that mistakes were more observable and less tolerated.
The head of IBM Superlife, Dominic McHugh, was unavailable for comment.